Question

Q. The Mutual Agreement Procedure often seen in the news is related to which of the following?

• A. Alternate dispute resolution mechanism for Tax disputes
• B. Exchange of information on taxation
• C. For establishing the standards in the trade of Goods and Services
• D. None of the Above

Answer 1

The correct option is A Alternate dispute resolution mechanism for Tax disputes

Explanation:

• The Mutual Agreement Procedure(MAP) in tax conventions allows designated representatives (the “competent authorities”) from the governments of the contracting states to interact with the intent to resolve international tax disputes. These disputes involve cases of double taxation (juridical and economic) as well as inconsistencies in the interpretation and application of a convention.
• Double taxation avoidance agreements signed by India usually have the MAP article as a part of it and a taxpayer can seek assistance under the same.
• It is one of the important actions to be standardized under the OECD framework on BEPS.